Is Nextwave in the shadows to facilitate the Verizon rollout?
Verizon Inching Toward High-Speed Wireless
By George Mannes
Senior Writer
03/17/2003 04:59 PM EST
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Verizon (VZ:NYSE - news - commentary - research - analysis) is ambling to the front of the pack in the slow march to high-speed wireless.
Starting in the second half of the year, the telco will start offering a wireless data service boasting connection speeds in the neighborhood of cable modems and DSL lines, Verizon said Monday.
The announcement, which Verizon made at a wireless industry trade show in New Orleans, would make Verizon the first nationwide carrier to offer wireless data connections at such speeds. But given the unknowns associated with Verizon's announcement -- including the cost of the technology to Verizon and the cost of the new service -- the complete significance of the new venture is unknowable.
Whatever the ultimate impact, Verizon's announcement represents a slight ray of hope for telecom gearmakers such as Lucent Technologies (LU:NYSE - news - commentary - research - analysis) and Nortel Networks (NT:NYSE - news - commentary - research - analysis), the named suppliers for Washington, D.C., and San Diego, the two markets slated for commercial launch.
After the Great Telecom Capex Meltdown of recent years, the opportunity to upgrade wireless systems for high-capacity data transmission represents a promising market for these and other suppliers. But a nationwide buildout of the high-speed network Verizon is starting will surely be more closely attuned to customer demand than was construction of fiber-optic networks in the glory days.
In fact, says one analyst, Verizon has clearly backed away from aggressive high-speed wireless data rollout plans it envisioned over a year ago. "They've really scaled back their ambitions," says Weston Henderek, wireless industry analyst for the Current Analysis research firm. "They don't want to jump the gun."
Against the backdrop of Monday's rally, Verizon's shares rose 76 cents, to $35.81, Lucent's rose 5 cents, to $1.56, and Nortel's were up 5 cents, to $2.17.
Language and Reality
The technology Verizon is rolling out, known as 1xEV-DO, offers connection speeds up to 2.4 megabits per second, though Verizon says users can expect "average" data rates one-third that speed or less, in the range of 300 to 800 kilobits per second. The sweetly named 1xEV-DO functions only on CDMA networks such as those operated by Verizon and Sprint PCS (PCS:NYSE - news - commentary - research - analysis).
By comparison, says Henderek, the current wireless data network offered by Verizon, which peaks at 144 kilobits per second, offers an average speed of 40 to 50 kilobits per second. Current data speeds on GSM networks operated by AT&T Wireless (AWE:NYSE - news - commentary - research - analysis) and Cingular average about 20 kilobits per second, according to Henderek, and the EDGE technology that these carriers are rolling out averages 70 kilobits per second.
But while customers in Washington and San Diego could enjoy significantly faster connections come this fall, Verizon isn't saying yet how much they'll be paying, or how much it will cost the telco to upgrade its cellular network. A Verizon Wireless spokeswoman notes that Verizon's current data service plans include an unlimited-usage offering priced at $99 a month. The PCMCIA card necessary to use the service averages between $200 and $300, she says.
If the forthcoming service is inexpensive, "it's a really big deal," says Cynthia Brumfield, president of Broadband Intelligence, a media research and analysis firm. "If it's very expensive, I think it's going to be a niche service for a while. ... We're talking about something that's going to happen very slowly."
Verizon's launch of the service in San Diego and Washington isn't too surprising, adds Henderek, since the company was already conducting technical trials in both areas. "The investment was already there," he says.
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